Horror Vacui
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Where have you find this circuit? Does it have an explanation? I am curious.
If we model HBT2 as a gm stage with a parallel conductance, then it shows a negative input impedance. It means that for increased input amplitude amplitude more current will flow into the base of HBT1. Vbb will set an - absolute, not AC! - threshold voltage above which this effect will kick-off. If this happens at the point, where the gain of HBT1 starts to drop, than this circuit will compensate at the input some of the gain drop of HBT1 and thus leads to a higher compression point. Due to the nature of this transient threshold, it would introduce higher harmonics as well, so it will not help in increasing the intercept point. Note, that it does not contradict with the higher compression point.
The idea is very similar to introducing a zero into the transfer function.
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